TMI Blog2021 (3) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... d therefore would fall out of Chapter 8. Though several stages/ process are claimed to be done in the write up given by supplier, during the argument the process undertaken was mainly confined to boiling in water and drying in sun light. Even if some stage of drying or rehydrating or treatment is done for preservation / stabilization or maintaining the appearance, as long as the nuts retain the character of dried nuts, they fall under Chapter 8. The counsel for appellants had placed before us samples of dried whole betel nut (without husks) as well as sample of the imported goods. We were able to see that the imported goods are also whole but more dried. It can be seen that CTH 21069030 takes in the items betel nut product known as suprai . To be more clear what is described therein is betel nut product and not betel nut whole as seen in Chapter 8. Chapter Note 2 of Chapter 21 also speaks about betel nut product and not betel nut whole . As per Chapter Note 2 of Chapter 21 betel nut product means any preparation containing betel nut, but not containing lime, katha and tobacco. It may or may not contain cardamom, copra, or menthol. The appellants do not have a case t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods are stored at a unit of FTZ on behalf of the appellants. Appellants had classified the goods under CTH 21069030 and submitted a write up given by their supplier / exporter, M/s.Nadaraj International Company Ltd., Yangon, Myanmar explaining various stages of process undergone by the imported goods. The goods were examined by the officers of FTZ and they were of the view that since the imported betel nut (Areca-nuts) are whole nuts and are classifiable under CTH 08028010, it is a prohibited item for import as the CIF value of the goods is lesser than ₹ 251/- per kg. 3. On reasonable doubt, samples were drawn and sent for examination to the Chemical Examiner, Customs Laboratory, Customs House, Chennai. The Chemical Examiner stated that it could not be ascertained whether the betel nuts are boiled / roasted. It was also stated that it is free of cardamom and added food starch. On the view that various processes as claimed by the appellants in their write up having not been undertaken to make the betel nut product of betel nut or preparations containing betel nut , the assessing officer held that the impugned goods do not merit classification under CTH 21069030 as clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Standard Preferential Areas (1) (2) (3) (4) (5) 0801 COCONUTS, BRAZIL NUTS AND CASHEW NUTS, FRESH OR DRIED, WHETHER OR NOT SHELLED OR PEELED - Coconuts : 0801 11 00 -- Desiccated kg. 70% 60% 0801 12 -- In the inner shell (endocarp) : 0801 12 10 --- Fresh kg. 70% 60% 0801 12 20 --- Dried kg. 70% 60% 0801 12 90 --- Other kg. 70% 60% 0801 19 -- Ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kg. 30% 20% Walnuts : 0802 31 00 -- In shell kg. 30% 20% 0802 32 00 -- Shelled kg. 30% 20% - Chestnuts ( Castanea spp.) 0802 41 00 --In shell kg. 30% 20% 0802 42 00 -- Shelled kg. 30% 20% - Pistachios : 0802 51 00 -- In shell kg. 30% 20% 0802 52 00 -- Shelled kg. 30% 20% - Macademic nuts : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kg. 30% 20% 0804 10 20 --- Soft ( khayzur or wet dates) kg. 30% 20% 0804 10 30 --- Hard ( chhohara or kharek) kg. 30% 20% CHAPTER 21 Miscellaneous edible preparations Notes : 1. This Chapter does not cover : (a) mixed vegetables of heading 0712; (b) roasted coffee substitutes containing coffee in any proportion (heading 0901); (c) flavoured (heading 0902); (d) spices or other products of headings 0904 to 0910; (e) food preparations, other than the products described in heading 2103 or 2104, containing more than 20% by weight of sausage, meat, meat offal, blood, fish or crustaceans, molluscs or other aquatic invertebrates, or any combination thereof (Chapter 16); (f) yeast put up as a medicament or other products of heading 3003 or 3004; or (g) prepared enzymes of heading 3507. 2. Extracts of the substitutes referred to in Note 1 (b) above are to be classified in heading 2101. 3. For the purposes of he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for making beverages, whether or not sweetened; (f) preparations consisting of tea or coffee and milk powder, sugar and any other added ingredients : (g) preparations (for example, tablets) consisting of saccharin and foodstuff, such as lactose, used for sweetening purposes: (h) pre-cooked rice, cooked either fully or partially and their dehydrates; and (i) preparations for lemonades or other beverages, consisting, for example, of flavoured or coloured syrups, syrup flavoured with an added concentrated extract, syrup flavoured with fruit juices and concentrated fruit juice with added ingredients. 6. Tariff item 2106 90 99 includes sweet meats commonly known as Misthans or Mithai or called by any other name. They also include products commonly known as Namkeens , mixtures , Bhujia , Chabena or called by any other name. Such products remain classified in these sub-headings irrespective of the nature of their ingredients. Tariff Item Description of goods Unit Rate of duty Standard Preferential Areas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21061000 - Protein concentrates and textured protein substances kg. *40% - 210690 - Other : --- Soft drink concentrates : 21069011 ---- Sharbat kg. 150% - 21069019 ---- Other kg. 150% - 21069020 --- Pan masala kg. 150% - 21069030 --- Betel nut product known as Supari kg. 150% - 21069040 --- Sugar-syrups containing added flavouring or colouring matter, not elsewhere specified or included; lactose syrup; glucose syrup and malto dextrine syr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to be called betel nut known as supari is that preparation should be containing betel nuts, but not containing any one or more of the following ingredients, namely : lime, katha (catechu) and tobacco whether or not containing any other ingredients. As the impugned goods are preparation of boiled betel nuts but are not containing any one or more of the following ingredients, namely: lime, katha (catechu) and tobacco, the said preparations are betel nut preparations known as supari . This is borne out by the said Supplementary Note which states that the preparation will remain betel nut known as supari if it is containing betel nuts but not containing lime, katha (catechu) and tobacco irrespective of whether or not containing any other ingredients, such as cardamom, copra or menthol. This view also finds support from Rule 2(b) of General rules for the interpretation of Import Tariff which states that any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combination of that material or substance with other material or substance. Further, Rule 3 (a) of the General Rules for the Interpretation of the Schedule clarifies tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kin to the process adopted by the exporter in the instant case where fresh green betel nut are taken and large impurities are removed by labor and then small impurities. Further, process of metal detection (removal of metal items if any) boiling in water with Arecanut precipitate for 6 hrs., drying in oven and packing etc. is completed. The authority for advance ruling held that even such suparis by the name of API Supari which are in fact boiled betel nut converted into boiled supari and edible are classifiable under CTH 2106930. 5.8 The Commissioner (Appeals) has erred in not relying upon the advance ruling cited above merely on the ground that the Advance Ruling is applicable to the applicant only who has sought it from the authority. This advance ruling has wider application as it is in consonance with the chapter notes and the section notes in the customs tariff and the central excise tariff. Moreover, the API supari covered in the aforesaid ruling is exactly applicable to the boiled supari imported by the appellant and therefore, the ruling is fully applicable to the instant case. 5.9 As stated above, since the initial process of manufacture was inadvertently given by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ein it was reported that sample conform to Betelnuts (Boiled Supari) (21069030) conforms to the requirements as laid down under 2.3.55 of Food Safety Standards (Food Products). Further vide sl.no.6 of the tabular column the prescribed limit of moisture in the imported item should not be more than (NMT) 7.0gm/100g the ascertained value reported as 5.84g 5.158/100g which is well below the norms prescribed as per the (Food Products Standards Foods Additives) Regulations, 2011. The analysis report by the said agency confirms that the subject goods were subjected to boiling in water for 6 to 8 hrs and sun dried, hence the moisture content is reduced to 5.15g as against in the prescribed limit of 7.0g/100g. The FSSAI is also a Government body and their report about the edible nature of the product in the condition where it was imported cannot be discarded. 5.14 Further, the ld. Commissioner (Appeals) has erred in not relying upon the case of Columbia Sportswear co. vs. Director of Income Tax, Bangalore reported in 2012 (283) ELT 321 (SC)] where it has been held that the boiled supari are made ready for human consumption. 5.15 It is further submitted that M/S Oliya Steel had als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... automatic gravity separation machine which again entails a huge investment. The last part of the process is to give the product a look and feel by roasting it fire gas roaster and add cardamom and any other relevant spices. Even at this stage also, any metal, if detected, is removed by magnetic metal detectors and after that the product is packed. It is thus, evident and imminently clear that with such a rigorous manufacturing process the classification of the raw material is bound to change and therefore, cannot be classified under 0802 but the merits to be classified under 21069030 worldwide. 11. In this letter it has been stated that betel nuts have been subjected to several processes and then imported. However, the report of the Chemical Examiner does not show that impugned goods have been subjected to any of these processes. At the time of arguments before this Tribunal, as also before the lower authority, the main contention put forward by the counsel for appellants is that the betel nuts were subjected to boiling in water for 6 to 8 hours and dried in sun light and the moisture content is reduced considerably. It was also argued that betel nuts are edible only and aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ong as the nuts retain the character of dried nuts, they fall under Chapter 8. The counsel for appellants had placed before us samples of dried whole betel nut (without husks) as well as sample of the imported goods. We were able to see that the imported goods are also whole but more dried. 15. Ld. Counsel for appellants has referred to Chapter Note 2 of Chapter 21 to strongly contend that the goods would fall under CTH 21069030. From the table reproduced earlier, it can be seen that CTH 21069030 takes in the items betel nut product known as suprai . To be more clear what is described therein is betel nut product and not betel nut whole as seen in Chapter 8. Chapter Note 2 of Chapter 21 also speaks about betel nut product and not betel nut whole . As per Chapter Note 2 of Chapter 21 betel nut product means any preparation containing betel nut, but not containing lime, katha and tobacco. It may or may not contain cardamom, copra, or menthol. The appellants do not have a case that their goods contain cardamom, copra or menthol or any additives. Counsel for appellants has made much effort to contend that after boiling though whole the betel nut becomes betel nut produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nut is known in the market as supari . The appellant has no contention that they have added any ingredients. The Chemical Examiner s report states that it is free of cardamom. It is also stated by the Examiner that it is not possible to ascertain whether the nuts are boiled. Though the Food Safety authority in their certificate has used the words boiled suprari , it is of not much support to the appellants as this authority has only to look into whether goods imported are fit for human consumption or not. Even sun dried / or machine dried betel nut whole would be fit for human consumption if it does not contain fungi and other harmful elements. From the appearance of the betel nuts whole (imported) placed before us we are not able to conclude whether these nuts are boiled and then dried or only dried. Although in the report of Chemical Examiner and FSSAI the competing classifications have been mentioned, we do not find any evidence to support that various processes as stated in the write up of the supplier has been undertaken on the nuts. We do not have quarrel with the position that the Chemical Examiner, FSSAI authority or the Foreign Supplier cannot decide the classificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Note No.6 to Chapter 21. In view of said ruling of this Authority in case of M/s.Excellent Betel Nut Products Pvt. Ltd. it is clear that Supplementary Note 2 to Chapter 21 to the Customs Tariff does not require any change in the nature of the end product and also reliance on the Hon ble Supreme Court judgment in case of M/s.Crane Betel Nut Powder Works (supra) is not appropriate . It is further noticed that CTH 0802 covers only fresh and dried Areca Nuts/ Betel Nuts. All items proposed to be imported except Unflavoured Supari are boiled. These items, after boiling, do not remain fresh and dried . Therefore, we agree with the contention of the applicant that said items would not merit classification under 0802. 11. Revenue also submits that in respect of applicant s claim that in case of API Supari , Betel nut is boiled for 6 hours, cannot be conclusively proved and hence not ascertainable, it is noticed from the process of preparation submitted by the applicant in respect of API Supari that it is not restricted to boiling betel nut for 6 hours but includes removing of large impurities by labour, boiling in water for 6-8 hours with lemon peel and/or food starch for impart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e classification of impugned goods. Moreover, it can be seen that the impugned products in the case of Crane Betel Nut Powder Works (supra) have undergone much more elaborate processes like cutting into different sizes; adding essential / non-essential oils, menthol, sweetening agents etc. Even when the physical appearance undergoes a change, Apex Court held that the processes undertaken do not amount to manufacture. Whereas, the processes undertaken in the instant case are less complex and simple like de-husking, cleaning, boiling and drying. For the reasons cited above, the processes cannot be held to be amounting to manufacture so as to necessitate the movement of goods fro Chapter 8 to Chapter 21. 22. From the above, we have to say that since the import goods are betel nuts whole , these would merit classification under Chapter 8 and specifically under Chapter 08028010 as classified by the department. We cannot refrain from stating that the Commissioner (Appeals) has made detailed discussion of facts and the law and arrived at the correct classification. 23. For the foregoing reasons, both the appeals are dismissed. (Order pronounced in court on 26.02.2021) - - Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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